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Chevron, Occidental, and oil trading giant Trafigura have agreed to explore the idea to price the light U.S. crude they export to Asia off the upcoming ICE Murban Futures contract for light sweet crude, the operator Intercontinental Exchange ICE said in a statement.
The Murban futures contract will be an alternative pricing benchmark to the benchmark Oman/Dubai average, which is currently the most used benchmark in the Middle East and off which the oil exporters from the Middle East price their oil going to Asia.
The Murban futures contract for light crude could spare Asian buyers the use of Brent Crude futures for hedging, according to Reuters.
Trafigura and U.S. oil majors Chevron and Occidental are the largest exporters of U.S. crude oil, and using the new futures contract – to be launched in March next year – to price their oil to Asia shows the growing importance of U.S. crude oil exports on the international oil markets.
“As one of the largest exporters of US crude to Asia, we are pleased to explore opportunities to utilize the new price benchmark for light sweet crude oil that Murban Futures will provide,” Fred Forthuber, President, Oxy Energy Services, said in ICE’s statement. “Murban moving to forward looking pricing, as a futures contract, is another great step in the evolution of the oil market,” Forthuber added.
“The Murban Futures Contract is a positive development in enhancing transparency for oil markets and very relevant to us as an active participant in crude oil trading in the Arabian Gulf and as the largest exporter of US crude. We look forward to playing an active part in the new benchmark,” Daniel Yuen, Head of Crude Asia for Trafigura, said.
Earlier this week, ICE said it plans to launch ICE Futures Abu Dhabi (IFAD) and the world’s first futures contracts based on Murban crude oil on March 29, 2021, subject to the completion of regulatory approvals.
Abu Dhabi National Oil Company (ADNOC) and nine of the world’s biggest energy traders—including BP, Shell, Total, and Vitol—partnered in November last year to launch the crude oil futures exchange in Abu Dhabi and the Murban crude oil futures contract.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com